Rand on Track, despite Hurricanes & Earthquakes, (no) Hikes & Scandals

Natural disasters, economic disasters and whipsawing financial markets...

The Rand was dealt further body blows this last week...and in so doing moved into our predicted target areas from last week - issued before any of these hit.

The fun ride the Rand has been on does seem to be coming to an end (despite pullbacks in the latter part of the week)...

...but what has been causing this? News? Events? Politics? Big players?

Though these are part of the puzzle, what actually moves the markets is

And human sentiment is not just your or my sentiment, but the net effect of all the emotions of the many millions involved in the $17.2 billion traded against the Rand each and every day.

Way too big for one news event, or one big player's intentions...

So how do we navigate this road, and cut through all the noise and fog?

Read on to find out...

Our forecast (see below - click to enlarge) on Friday showed that despite the pullback we had had after the market hit R13.26, we were still expected to go higher into the R13.27-13.44 area.

Click to enlarge

And as anticipated per our analysis, we lost ground...recovered...then lost some more fast.

The events of note from this past week were:

• KPMG Scandal rolls on - apologies, joining of the dots with the crude oil sale from 2015 and more continuing to grab the headlines...
• President Trump's Speech at the 72nd UN Event - a speech like no other president has given at a UN event...
• Fed Interest Rate Decision - no change seemingly makes lots of action...as the Fed puts rates on hold, markets sky-rocket and plummet worldwide
• Hurricane Maria rips through the Caribbean - more destruction from natural disasters...
• ...followed by a killer earthquake in Mexico - death toll is around 230 and counting!
• SARB Interest Rate Decision - because one interest rate decision in a week was not enough...

Monday was fairly void in terms of events, but did not stop the Rand looking ahead to the upcoming ones...

With the UN meeting on Tuesday, US Fed on Wednesday, and SA Inflation rate combined with SARB Interest Rate on Thursday, there was plenty to look forward to.

And as if in anticipation of this, the Rand weakened consistently on Monday, moving from the low of R13.11, all the way as high as R13.31/$ - right in our target area.

EU had good inflation figures, and as did the US, upping expectation of a December Rate Hike to 60%...

The Rand, with a restless feeling to it, moved on to Tuesday.

Today was Trump's big day - his first UN speech, and possibly one of the most critical ones of all time. North Korea and Iran posed significant threats which needed addressing...

....and they were addressed - as he lambasted "The Rocket Man" from North Korea, and his devilish actions, as well as Iran, and many other topics in a 40 minute speech which will be remembered for a long time.

The US economy appears (apparently) very strong as Wall street continues to smash records and trade at an all-time high...and Trump is riding this wave.

After and during the SA inflation rate announcement and Trump 's speech, the Rand weakened as far as R13.34 - but still only a range a range of 8c during the course of the day.

Wednesday brought us some major events for the week, just as Hurricane Maria began exerting all the force of nature onto Puerto Rico, sending the entire island into darkness (even Eskom has not managed to send the entire of the country into darkness...!)

On top of that, another terrific earthquake of 7.1 magnitude, killing well over 200 people, happened nearby Mexico City...natural disasters aplenty.

Further news on KPMG arose - this time the probe into South Africa's sale of 10 million barrels of crude oil reserves (possibly one of the ANC's greatest heists) may be delayed as there are concerns over the key financial analysis in the investigation was conducted by KPMG...shenanigans aplenty ... (read more here...)

The market was volatile on Wednesday, and there were some good gains as the USDZAR made it down as R13.19, retracing after making it into our target area.

But then, in late afternoon, it was time for the Fed Interest Rate Decision...

...and it seemed no news translated to major action!

The Fed held interest rates, but the market spiked 18c in less than 1 hour! Briefly, the Rand traded at R13.38/$ before recovering back to around R13.30...

In the midst of all this, our forecast was due:

The Rand had moved perfectly into our target area, and was now expected to move further upward before topping out. The target area was 13.36-13.45, with a topping out in that area, and a retracement toward 13.1933 or lower expected.

Click to enlarge

Thursday had arrived, and that meant we were counting down the hours to the SA Interest Rate Decision...

...but not forgetting what we learnt on Wednesday - another interest rate hike in 2017 is likely, and as is 3 more in 2018. This gave the USD some oomph, and that brought us to starting Thursday comfortably over R13.30/$...

...before the fun started

As can be seen ... more volatility was on show.

By mid-morning, the market spiked as far as R13.40, right into our target area from Wednesday's forecast.

However, from there, the market retraced, until it came head to head with the Interest Rate Decision at 15:00...and to some persons surprise, the rates were kept the same.

As for the Rand though, it took this news with aplomb!

In a couple of hours, it cruised below R13.25/$, and then further, as low as R13.20, late on Thursday.

Friday was quiet for the most part, but we did see the market make it back to R13.16/$ very briefly - only to return above the 13.20 mark vs the greenback.

And with that, the greenback closed the week out. Monday was a public holiday for Heritage Day in SA, so the long weekend was going to be enjoyed...!

Wow, quite some action for just one week.

But through all the news, the Rand marched along the anticipated road mapped out in our forecasts, cutting through all the noise, fog and clutter.

So, this week is a short one, but is unlikely to be any less volatile, even if there aren 't any high impact data releases on the horizon. Rhetoric out of North Korea is enough to keep the markets on their toes!

Based on our analysis, the initial outlook is for more Rand weakness, with resistance around 13.40 being a key level to be watching this week.
So where does this leave YOU?

Last week, once again, our clients were able to ignore the news and merely trust what the charts were saying...enabling them to take action at the right time.

This is not a time to be flying blind, or going by gut feel, that's for sure!

And that's why I am wanting to help - by offering you information that will enable you make better decisions with more clarity and confidence, with less time, stress and effort ...

And, nogal, for FREE for a full 14 days.

Be my guest - and take us for a ride!

Look forward to helping succeed~

Kind regards,

James Paynter